Lower U.S. wheat production has limited effect on global demand
Share Facebook Twitter Google + LinkedIn Pinterest This year, U.S. wheat planted area will fall to the lowest level since 1970, according to Mark Simone of the Foreign Agricultural Service (FAS). The USDA held its annual Agricultural Outlook Forum where Simone presented the 2016 Grain and Oilseeds outlook. USDA currently estimates 2016/17 (June to May) wheat acreage at 51 million acres, a 6% decrease from last year.Winter wheat plantings are down 7% according to USDA, with the hard red winter (HRW) crop having the largest decrease. HRW plantings fell by 9% to 26.5 million acres. Soft red winter (SRW) plantings decreased by 400,000 acres to 6.7 million acres. USDA anticipates a 5% reduction in spring wheat plantings due to more favorable returns for other commodities. Currently, USDA’s spring wheat and durum acreage projection stands at 14.4 million acres, down from 15.1 million acres last year.Due to the expected reduction in planted area, production will decrease for HRW, hard red spring (HRS) and durum despite a predicted increase in average wheat yields. USDA expects white wheat production to increase slightly due to a small increase in planted area and more favorable growing conditions. SRW production will remain flat with an expected increase in yield predicted to offset the lower planted area. Based on trend yields, USDA expects the national average yield to grow to 45.9 bushels per acre. USDA projects the wheat harvested-to-planted ratio will fall to 0.85, down slightly from last year’s 0.86 due to a small increase in expected abandonment rates.Although planted area is down for winter wheat, current crop conditions for many HRW-producing states are significantly better than this time last year, with 57% of the total HRW crop in either good or excellent condition compared to 44% last year. However, warm temperatures brought wheat out of dormancy earlier than normal across much of the HRW growing region, increasing the plants’ need for water and vulnerability to a late-spring freeze. Current SRW crop conditions also improved from last year with 58 percent of the crop in either good or excellent condition in Illinois, the only SRW state for which data is available at this time. USDA weekly crop progress reports will resume on April 4.An increase in carryover stocks will push total U.S. supplies higher in 2016/17. USDA forecasts 2016/17 U.S. supplies at 83.9 million metric tons (MMT), up 5% from 2015/16 and 2% more than the 5-year average, if realized. Demand in the U.S. will grow in 2016/17, with USDA anticipating a 5% increase in domestic use, from 32.2 MMT to 33.8 MMT.Price competition from other wheat exporters will continue to pressure demand for U.S. wheat, in spite of an anticipated decrease in world wheat production after three consecutive record crops. However, USDA expects U.S. exports to rebound a bit to 23.1 MMT, up 6% from the forecasted 2015/16 U.S. wheat export level of 21.1 MMT.